Household-products maker Kimberly-ClarkKMB said Thursday it plans to cut 1,600 jobs, or 3% of its global work force, as it slims down in the tough economy.
The maker of Kleenex tissues, Huggies diapers and scores of other household items employs 53,000 people around the world. It plans to make the cuts primarily among salaried and non-production workers and executives said the company doesn't plan to close any plants.
Profits at Kimberly-Clark have fallen for the past 18 months, as shoppers cut back on spending because of the recession, high unemployment and the housing downturn. Meanwhile revenue, which had been steadily rising, began to fall late last year.
Kimberly-Clark was also hurt as the value of the dollar rose relative to other currencies — crimping profits from overseas sales — and consumers who traded down to cheaper, store-brand products.
Morningstar analyst Erin Swanson said the layoffs are a sign of acceptance by the company of its financial struggles and how changing consumer behavior is affecting sales.
"If a consumer is out of eggs or oil, they're probably going to run to the store to get it right away," she said. "But if they run out of paper towels, they're probably going to put it on a list and pick it up the next time they're at the store. Consumers have been going through what they have in their pantries — stuff that they've bought before — and they're lengthening out that purchase cycle."
The company, which already conducted voluntary layoffs and hinted in April that the job cuts would be coming, said it expects the cuts to save about $150 million a year, or about 25 cents per share. It will mostly affect second-quarter results, when the company will record $110 million of the costs. It estimates total restructuring costs between $140 million to $150 million.
"These actions, while difficult, are necessary to help us emerge from this demanding economic environment as a stronger company," CEO Tom Falk said in a statement.
In the second half of the year, the company expect the restructuring will translate into savings of 10 cents per share.
The Irving, Texas-based consumer-products company said it would update its earnings guidance when it reports second-quarter results on July 23.
Shares rose 98 cents, or 1.9%, to $52.75 in trading Thursday.
AP Retail Writer Vinnee Tong in New York contributed to this report.